Waste Management Contract Review Could Mean Big Changes for Local Businesses

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Image: Waste Management.
Image: Waste Management.

An outside legal review of the City of Reno’s franchise agreements with Waste Management could spell big changes for area businesses that are using other companies for waste collection.

Rubbish Runners, Nevada Recycling and Salvage (NRS) and Green Solutions are going to have to change how they charge for waste and recyclable collection.

Businesses using services by Rubbish Runners, Nevada Recycling and Salvage (NRS) and Green Solutions may be contacted by the City of Reno in the near future to determine whether their waste disposal and recycling practices violate Waste Management’s exclusive franchise agreement.

If so, Rubbish Runners, Nevada Recycling and Salvage (NRS) and Green Solutions may have to change their business model to comply with city law. That’s according to Assistant City Attorney, Jonathan Shipman, who said that the City Council intended Waste Management to have an exclusive monopoly on waste collection and disposal within the City.

“They’re going to have to true up their business model to make it conform with the franchise,” Shipman said of the three companies. “The other impacts are the businesses that are using NRS, Rubbish Runners and Green Solutions — those are typically maybe office companies that have a lot of dry waste — they’re going to have to be educated too, to understand what is okay under the franchise and what is not okay.

“It really comes down to how do they handle recyclables versus how do they handle solid waste that gets disposed of,” Shipman added. “It wasn’t clear in the market where that line was until now that we have this administrative interpretation. We expect people to come into compliance pretty quickly, quite frankly.”

The news was not welcomed by three companies.

“We have seen the interpretation from outside council and we are extremely concerned and disappointed,” said spokesperson Mike Draper. “The franchise agreement independent counsel’s interpretation completely ignores and does not reflect the discussion and understanding that took place during the public hearings surrounding the development of the agreements. It is extremely inconsistent in its drafting.”

City Manager Andrew Clinger ordered the review of the city’s agreements with Waste Management after the City Council expressed repeated frustration with the company.

Las Vegas-based law firm Howard & Howard was hired by the city for $5,688 to review the parts of the lengthy and complex agreements.

The firm looked at three questions:

1.    Whether a hauler other than the (Waste Management) named in the agreements can collect excluded recyclable materials and charge a service fee for: (a) renting containers; and (b) collecting and transporting Excluded Recyclable Materials.
2.    Whether the agreements allow Nevada Recycling & Salvage (“NRS”) to collect and haul up to 125,000 cubic yards of collection materials directly from commercial customers.
3.    Whether Refuse, Inc. (Waste Management) has defaulted in its obligation for the “Construction of Eco-Center” under the disposal agreement by failing to construct the Eco-Center within 28 months.

The firm determined that the three waste haulers cannot charge service fees for containers and for collecting excluded recyclable materials. It also said that Nevada Recycling and Salvage “is not permitted, under the terms of either the commercial agreement or the disposal agreement, to collect or haul any collection materials, including the exempted facility materials.”

Howard & Howard also found that Waste Management could be in default of its agreement with the city if it has not started constructing its Eco Center — however, city staff said that Waste Management is in compliance and expects the center to be open and operating in 2017.

Waste Management originally said that it supported the outside review of its agreements but later opposed it. Company spokesperson Sarah Polito said they are happy with the review.

“We are pleased with the results of the independent legal review commissioned by the Reno City Council,” she said. “The findings align with both the city’s and our understanding of the franchise agreement. Now that the administrative interpretation has been issued, we look forward to the franchise agreement being followed by all of the other haulers and enforced by the City of Reno.”

Polito said that the Eco Center should be open in 2017, pending approval of permits.

“As with any significant permitting and construction project, unforeseen delays can occur, but we remain optimistic that it will open on schedule,” she added.

Councilman Paul McKenzie
Councilman Paul McKenzie

Coucilman Paul McKenzie, who has been a vocal critic of Waste Management, said the contract review missed some things.

“I believe there was … a very important part of the franchise agreement left out of the (review), and that’s the fact that there’s haulers that are authorized to haul and collect rubbish and things around the city that are authorized beyond the franchise agreement,” he said. “He didn’t enter that into his analysis as far as if they could pick up the exempted recyclables, haul them and deliver them to a place for (recycling).

“That’s a key part of the franchise agreement and key part of the discussion that I think was left out of the analysis.”

Shipman said that the city is going to conduct outreach to affected businesses, but Draper said that he wants more consideration for how the contract review will affect the three private waste haulers.

“We are only asking that Waste Management … be held to the standard of the spirit and understanding with which the agreements were drafted and allow businesses to compete for a portion of the commercial recycling business in our region … not to create exclusive recycling rights for Waste Management or force locally owned small businesses to close their doors,” he said. “(The review is) clearly contrary to the City Council’s intent when entering into the agreements.

“We are still working with the current city council to ensure this happens.”

UPDATE 5/6/2016 (see comment below the article): Stephanie Rice of the Winter Street Law Group said Shipman’s statements are not consistent with her conversions with the city.

“After the administrative interpretations were released, I personally met with several members of the City Council as well as City Manager Clinger, who personally assured me that the City would not take action on the Interpretations until after having the opportunity to address the arguable inaccuracies in the Interpretations and other matters pending before the City for consideration,” she said. “In fact, Mayor Schieve, Mr. Clinger and several other Council Members have continuously acknowledged and agreed that all of the other haulers, small businesses and materials recovery facilities have faced gross injustices at the hands these ongoing franchise problems.”

Read the independent review here: 11-Administrative Interpretations

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About Bob Conrad 836 Articles

Bob Conrad is proprietor and co-founder of ThisisReno. He manages ThisisReno and Conrad Communications, LLC, his marketing communications consulting company (disclosure: client work includes projects funded by grants through UNR) and is an adjunct faculty member at Truckee Meadows Community College. He is a contributor to Reno Public Radio.

1 Comment

  1. Unfortunately, the scope of work created for outside council was drafted in a manner that insinuated the answer that City staff clearly wanted- that is not an ‘independent’ interpretation to me. Outside council was not provided with the transcripts or recordings of the actual Council Meetings addressing these exact issues the outside attorney was asked to evaluate. How can the outside attorney determine the then City Council’s “intent” when executing the agreements if he didn’t take the time to review those meetings or speak directly to the previous council members?

    Obviously disappointed, after the Administrative Interpretations were released, I personally met with several members of the City Council as well as City Manager Clinger, who personally assured me that the City would not take action on the Interpretations until after having the opportunity to address the arguable inaccuracies in the Interpretations and other matters pending before the City for consideration. In fact, Mayor Schieve, Mr. Clinger and several other Council Members have continuously acknowledged and agreed that all of the other haulers, small businesses and materials recovery facilities have faced gross injustices at the hands these ongoing franchise problems.

    What is equally disturbing is the fact that Waste Management has been charging the citizens of Reno higher rates for single stream recycling for approximately three years now, when there is a belief that they are not actually recycling. There is no Eco-Center, which was represented by Waste Management to be necessary in order to be able to perform single stream recycling services. In fact, at the October 10, 2012 City Council meeting, Mr. Shipman was asked directly by then Councilman David Aiazzi what the penalty is for not building the Eco-Center in 28 months because they have been collecting the money, so if it doesn’t get built, what happens? City Attorney Shipman’s exact response was, “we could terminate the agreement at that point in time, for material breach.” Yet, it has now been over forty months and this community still has no Eco-Center as promised.

    While the Franchise Agreement(s) were executed prior to any of the current City Council members taking office, the same cannot be said about Mr. Shipman. To say that I am surprised by Mr. Shipman’s comments is a gross understatement. The sheer fact that Mr. Shipman thought it was appropriate to single out my clients, when there are several other haulers and small businesses in the City of Reno doing exactly the same things, says it all. Fortunately, with the Council’s support that has been promised, I am confident that this mess will be resolved in the coming months. I am proud of my clients for standing up for the local businesses and families in this community. The way that the City Attorney’s office has attempted to sweep these problems under the rug is disappointing to say the least. However, the City Council has assured me that these matters will be addressed and these wrongs will be made right in the immediate future.

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